BLAST FROM THE PAST : BITCOIN(Part 3)
As described in our last blog, Bitcoin is indeed a digital asset with wings. The wing, which when high, can mount heights and, when low, can drop to the ground. The year 2020 was highlighted by a massive upsurge in the price of bitcoin despite the worldwide pandemic. In a span of a year, the cost of bitcoin was quadrupled. Now, you must be wondering if the price is in the verse of getting octupled this year?? Or will it plunge again??? Come, sit with us as we lead you to this Bumpy journey of Bitcoin 2021.
IMPACT OF MUSK’S TWEET ON BITCOIN
Bitcoin was soaring to its new heights in the year 2020 in a quite unexpected way. Elon’s tweets are undoubtedly proven to be quite manipulative as he has more power than anyone to move the market up and down making him the biggest financial influencer. This year 2021 also started admirably well for Bitcoin, when musk added #bitcoin to his Twitter Bio which alone contrivance it to go high by 20% and price hovering around $40,000. The next spike in the Bitcoin price this year was when Elon Musk announced in February that his Car company Tesla bought about $1.5 Billion of cryptocurrency. This made investors believe in the future of this coin and they started following in Musk’s footsteps. Thus, the price of Bitcoin skyrocketed to $50,000. On the 24th of March, musk tweeted that tesla can be bought with Bitcoin. This again triggered the price of Bitcoin to yet another height of around $54,500. With this Incessant in Bitcoin price, its value spiked up to $65,000 in April.
Seeing the trend, a lot of financial experts speculated that the price of this Valuable digital coin would go High up to 100,000$ by the end of 2021. Well, who wouldn’t believe them after the constant ceaseless spike in the price.??? But, Not everything is sunshine and rainbows when it comes to bitcoin. Bitcoin values were touching new heights constantly in a very astonishing way. But as they say, “Everything that uncertainly rises will certainly fall”, holds true here. And then suddenly in one of the biggest turnaround event there was a huge fall in the price of Bitcoin after Musk’s tweet that Tesla will be Suspending vehicle Purchases using Bitcoin as it has a huge concern over the environment. He tweeted “We are concerned about rapidly increasing use of fossil fuel for bitcoin mining and there won’t be any compromise on the cost of environment”. Adding on to that Musk accelerated this decline by another series of tweets including one which gave an idea that tesla has sold all its invested bitcoin. Though, Musk later clarified that tesla hasn’t actually sold any bitcoin but by then the damage was quite massive. These all tweets led to a drop in the price of bitcoin to 32,000$ from the highest of 64,000$ just in a span of 15 days and thus, added up to influence “The Crypto Crash 2021”
AN INSULT TO INJURY — THE IMPACT OF CHINA ON BITCOIN
Just before the crypto crash on 24th May ‘The People’s Bank of China’ released a statement stating virtual currency is not a real currency and can not be used as a currency in the market. It should only be an investment option. It also warned financial institutions for accepting crypto-related products. Soon after this investors started liquidating their money and ended to contribute in the crypto crash. You must be wondering how and why the bank statement has a connection with Bitcoin’s Crash.??? Well, we have got you covered here…..
China hosts around 75% of the world’s Bitcoin mining capacity. This is because Cryptocurrency mining requires a huge amount of computing power, established technology, and extremely cheap electricity. Thus making the majority of Cryptocurrency’s Global transactions routed through Computers in china and so Chinese have a huge impact on crypto… It isn’t irrational speculation that Musk’s tweets and the People’s Bank of China have had an outsized influence on the price of the cryptocurrency. Especially, bitcoin.
A NEW RAY OF HOPE — El Salvador
El Salvador became the first country in the world to recognize and accept Bitcoin as legal tender alongside the US Dollar. Foreign remittances form a major part of El Salvador’s economy and hence, an inflow of remittances in the form of Bitcoin is expected to boost the economy. The news is extremely significant and a bold step towards a new world of decentralized currency. The news in itself was sufficient to send Bitcoin flying back to Mount $40k.
However, another twist in the tale occurred — El Salvador had approached the World Bank for assisting Bitcoin implementation within 90 days, which was rejected by the World Bank citing environmental and transparency concerns. This news was again sufficient enough to contribute in sending Bitcoin back below $40,000….
Though, a few experts claim that these ups and downs are a part of the bitcoin business game still, a lot of people don’t believe in bitcoin rising to its height again. What are your views, will it again reach the pinnacle to be the new decentralized currency or will this bubble break?? Do let us know your views in the comment section below!
Credits : Nidhi Karn — Team E-Cell ABV-IIITM Gwalior
